Ancillary Services Market Design in Distribution Networks: Review and Identification of Barriers

TLDR

The shift from synchronous generators to converter‑dominated distributed renewable energy sources in distribution grids is creating stability and security challenges, as existing ancillary service provision relies on SG characteristics and DRESs are not compensated for support functions, prompting the integration of storage, smart grid, and microgrid solutions. The review examines current transmission‑system ancillary services and their markets, focusing on DRES participation, and proposes new distribution‑grid ancillary services such as inertial response, ramp‑rate control, frequency response, voltage regulation, fault contribution, and harmonic mitigation. The authors review transmission‑system AS markets, highlight DRES participation, propose distribution‑grid AS categories, and present evolving market tools and mechanisms for procuring these services that expand operators’ roles. The study identifies and analyzes technical, regulatory, and financial barriers to implementing the proposed distribution‑grid ancillary services.

Abstract

The high proliferation of converter-dominated Distributed Renewable Energy Sources (DRESs) at the distribution grid level has gradually replaced the conventional synchronous generators (SGs) of the transmission system, resulting in emerging stability and security challenges. The inherent characteristics of the SGs are currently used for providing ancillary services (ASs), following the instructions of the Transmission System Operator, while the DRESs are obliged to offer specific system support functions, without being remunerated for these functions, but only for the energy they inject. This changing environment has prompted the integration of energy storage systems as a solution for transfusing new characteristics and elaborating their business in the electricity markets, while the smart grid infrastructure and the upcoming microgrid architectures contribute to the transformation of the distribution grid. This review investigates the existing ASs in transmission system with the respective markets (emphasizing the DRESs’ participation in these markets) and proposes new ASs at distribution grid level, with emphasis to inertial response, active power ramp rate control, frequency response, voltage regulation, fault contribution and harmonic mitigation. The market tools and mechanisms for the procurement of these ASs are presented evolving the existing role of the Operators. Finally, potential barriers in the technical, regulatory, and financial framework have been identified and analyzed.